LOI structure for recurring revenue

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by a searcher from Dartmouth College - Tuck School of Business at Dartmouth
in Hanover, NH, USA

1yr ago

LOI structure for recurring revenue

Hey folks - I am trying to put together my first LOI for an interesting business with the following features: - B2B, 2-6 year contracts (need to understand concentration issues better) - Rapid 3-year growth in revenue and EBITDA - Sub-$1M EBITDA Any advice on structuring the LOI with sufficient protections on contracts? For that matter, does anyone have a sample LOI that they would be willing to share? Thank you!

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reply by a professional 1yr ago
from University of Michigan in Detroit, MI, USA

Hi ^redacted‌, when it comes to the integrity of the customer contracts, you can ask the seller to make that representation in the purchase agreement. And I wouldn't necessarily worry about it until diligence. As for renews, a forgivable seller note is the way to go (assuming this is an SBA deal). You could tie forgiveness to specific contract renewals. Alternatively, you could tie it to revenue. Happy to discuss further. Feel free to email me at redacted

reply by a lender 1yr ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

If you need help from a lending perspective, we offer a free lender review on deals and can provide you feedback. You can reach me here or directly at redacted